Having been a member of Prosper.com for about 16 months now, I decided to give a round-up of what I’ve learned. I’m going to break this up into three areas:

• The Reason to Borrow Money – If you have credit card debt that you are trying to pay off, you might be able to borrow money at a lower interest rate at Prosper.com. This is what Tricia from Blogging Away Debt found. Instead of paying 13% to a faceless credit card company, she’s now paying 9.9% to a bunch of average people. If you are looking to reduce your credit card rate, borrowing money from Prosper might be a smart idea.
• The Reason to Lend Money – Remember that 9.9% that Tricia is paying above? That’s nearly double what you can get in a high-interest savings account. Indeed there is risk, I’m the poster child for that. I didn’t properly analyze risk when I started. However, in looking at my new strategy over the last six months, I’ve had only two late loans (out of around 50). This could go up over time, but it’s still very positive. I have also made 40+ loans to people with credit grades AA, A, and B and none of them are late! I’m making 18-19% on average on those loans. Lending money to credit grade D and E have not been successful for me. If you avoid that (something that I’m starting to do now), I think Prosper can be a great investment. If this sounds interesting to you, join Prosper through this link – you’ll get $25 to start and I’ll get $25 for referring you. If it’s helpful, I’ve written about some of my lending strategies in the past.
• The Case for the Little Man – As I mentioned above, banks and credit card companies love to charge high interest rates. The executives at those companies live like kings. A bank’s business is largely to give a small amount of interest to you while they lend it to other people at large interest rates. Credit card companies lend you money for free in hopes that you can’t pay them back right away, leading to high interest rates. Prosper allows you to be the banker and get some of those high interest rates for yourself. Don’t be fooled, Prosper takes their cut, but it’s far less than the bank’s cut. They can do this because they’ve automated the lending system. You do a lot of the bankers’ work and reap their rewards, but they provide the platform. The other side of the coin is that you are lending to individuals and small companies. You are not putting your money to work for those big company executives to buy themselves $600 toilet seats. You are helping someone get out of a debt hole or start a new company.

I think the time is right to join Prosper. There are tools for lenders to create and refine great strategies. The market place can only help borrowers – as Tricia found. So give it a shot and join Prosper today.